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- Bitcoin stabilizes after a sharp drop as volatility and leverage decline.
- Options markets show strong demand for downside protection.
- Onchain activity and miner selling remain weak, signaling low participation.
According to the blog, Bitcoin moved into a consolidation phase over the past month. Prices steadied after a sharp decline earlier in the period. The 30-day average price still showed a 19% drop, which reflected earlier weakness rather than current levels.
Volatility in the markets decreased significantly. Realized volatility decreased from 80 to just above 50. This was a clear indication that the markets were moving at a slower rate. Volatility decreases indicate that traders have reduced risk and have become less aggressive in the markets.
Futures markets also showed a similar trend. Funding rates decreased from 4.1% to 2.7%, which is a clear indication that traders have reduced the demand for long positions. Open interest in the futures markets also decreased by 1% month-over-month. This is a clear indication that traders have reduced risk and have become less aggressive in the markets.
Bitcoin Options Market Turns Cautious
Options markets also reflected a sense of caution. Total open interest rose to $33.4 billion. This meant that traders still had a large number of derivative contracts. However, the composition of these contracts showed that traders were cautious.
The put-to-call ratio averaged 0.77 and rose to 0.84. This was a record level since mid-2021. This meant that traders preferred to hedge against risks rather than focusing on gains. This level was also one of the highest in recent years.
The demand for protective options remained strong. Traders spent $685 million on put options over the last 30 days. Although this spending fell from the previous month, it remained high compared to most periods since early 2025.
The cost of protecting against further losses also rose to a record level of 4 basis points compared to spot trading volume. This meant that traders paid a high price to hedge against risks. At the same time, spending on call options fell by 12% to $562 million.
Implied Volatility Signals a Market Bottom.
Implied volatility data also supported this notion. Put options had significantly higher volatility compared to call options. This showed that people were demanding protection. In most cases, this level of defense had been a feature of a market low and a subsequent price increase.
There was a decrease in onchain activity across most key statistics. Transfer volume was down 31%, while daily fees fell by 27%. Active addresses also fell slightly, and average fees fell significantly. However, transactions rose slightly. This showed a decrease in overall onchain activity.
A greater percentage of transactions are now occurring off chain and on derivatives. This also contributes to a decrease in onchain activity. Long-term holders were also reducing their rate of selling. Older coins were less actively transferred. This showed a decrease in selling pressure from long-term holders. This is typically a feature of price stability.
There was an increase in economic pressure on miners. Revenues fell by 11%, and mining stocks also fell. However, they did not significantly increase their selling pressure. They sold most of their newly mined Bitcoin but did not sell their reserves.
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